How Much Life Insurance Do I Actually Need?

"How much coverage do I need?" comes right after "do I need it at all?" Buy too little and you leave a gap; buy way too much and you pay for coverage no one needs. Here are two simple ways to get a realistic number.

Method 1: The quick multiple

A common starting point is 10 to 15 times your annual income. If you earn $70,000, that is roughly $700,000 to $1,000,000 of coverage.

It is fast and decent as a rough estimate, but it ignores your debts and your specific family situation, so treat it as a floor to sanity-check, not a final answer.

Method 2: DIME (more accurate)

DIME adds up what your family would actually need to replace:

• D — Debt: all debts except the mortgage (cards, car, student loans).
• I — Income: your annual income times the number of years your family would need support (e.g., until the kids are grown).
• M — Mortgage: the remaining balance on your home.
• E — Education: estimated future cost of your children's education.

Add those four together, then subtract savings and any existing coverage. The result is a realistic target.

A quick example

• Debt: $20,000
• Income: $60,000 x 15 years = $900,000
• Mortgage: $400,000
• Education: $100,000
• Total need: $1,420,000, minus $120,000 in savings = about $1.3M of coverage.

Things people forget to include

• The value of unpaid work. If a stay-at-home parent passes, childcare and household costs are very real, that role deserves coverage too.
• Final expenses. Funerals and end-of-life costs can run into five figures.
• Inflation and time. Costs rise; a number that fits today should give some cushion.

You do not have to buy it all in one policy

You can layer coverage, for example a larger 20-year term to cover the years your kids are home, plus a smaller permanent policy for lifelong needs. The goal is enough protection without overpaying.

Want a number tailored to your situation? Grab the free Hawaii family checklist, or check what you may qualify for and we can size it together.